Features - It's the Content Stupid: A Real life analysis of Microsoft and 21st century society, or why the DOJ doesn't get it. Part I

Charles Kafoure is a technology consultant based in Indianapolis. He has been in
the business of providing equipment, software and/or services for twenty five years.
He has managed the establishment of large, turnkey computer projects in Korea,
China, Singapore, Japan, the U.S., other Asian and European countries, and in Australia.
He currently focuses on technology services for legal, real estate and other
professional businesses. He will soon publish an article entitled, "Litigation
Management: Organize Using Project Management Methodology."

(Archived August 15, 1998)

Author's Note

This article began as a simple analysis of the DOJ action against Microsoft.
After a couple of days, I realized two things: a) the DOJ case has no merit, and is not
worth more than a page or two, and b) Microsofts role in the world of technology
(that is to say "the world") is significant, and needs to be examined carefully,
but in the right context. I am not a lawyer, but have determined that lawyers arent
required just yet, as the issue is not yet properly framed from social and technological
perspectives. It is difficult to ask the right questions and come to the right conclusions
when the issues underlying those questions are ill-defined and no one really knows the
correct basis for the conclusions.

"I got by with a little help from my
friends..."

Notwithstanding the above paragraph, I wanted to address a few legal and legal
history points, and chatted with a three lawyers along the way for background. Thanks to
Robert Doyle, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, and David Russell,
Johnson, Smith, Pence, Densborn, Wright, & Heath, Indianapolis. Thanks also to a
lawyer in private practice who does work for Microsoft, and who wishes to remain
anonymous. They all offered some interesting insights. I "know" a lawyer named
David Hirsch, Beckman & Hirsch, Burlington, IA (we participate on a couple of the same
LISTSERVs), and his comments provided some valuable ideas. Thanks to all.

My technological preferences

This article was written on a Apple Macintosh 7100, an original PPC, with
OS7.6.1, which I like much more than Windows95, using Microsoft Word, which I like best,
on either the PC or Mac platform. I always use Netscape Navigator, whether on my
laptop PC, desktop PC, or desktop Mac. I do not like the Internet Explorer.

"and without any help from my subject.."

I got help from neither the DOJ nor Microsoft. I believe that the reasons for
non-cooperation were much different for each, but I can't be certain of this, having had
no substantive conversation with either.

Microsofts PR firm, Waggener-Edstrom, promised fast answers to my questions four
weeks ago. Now, after four phone calls and three emails, I have nothing but "I am
sorry. I will try to get answers today. I have been so-o-o-o busy." They got the best
of both worlds. They cant say that they refused to answer, but they didnt, and
they can refuse to answer, because they did. Confused? Me, too.

The DOJ, on the other hand, didn't return any of five phone calls to two
different people (the first one was on vacation when I called the last two times.) I
finally got to speak with the second one, who said (at 3:06pm) "I really wanted to
get out of here at 3:00. Would you like to see the Press Release after the Court of
Appeals decision, then call back on Monday?" Contents of the Press Release:
"Were disappointed in the Court of Appeals decision in the consent
decree case. We remain confident that the evidence and our legal arguments in our
antitrust case filed on May 18, 1998, will demonstrate that Microsofts conduct has
violated Federal antitrust laws."

Inspiring, isnt it?

The order of Business

Pat I of this article will cover a bit of history of the world of computing, and
address the DOJ case. In Part II, I will further detail what I have identified as the
newest era of computing, The Public Era, discuss Microsofts role in it, and why we
should be watchful of them.

Introduction

Computing in the 20th century has made an enduring impact on our society. In much the
same manner that the evolution of the automobile changed the way we lived from the late
19th century forward, our lives will be forever altered by events surrounding the
development of the computer, especially since the early 1980s when it became affordable,
and began a journey from novelty to necessity, from scarcity to standard. Much has been
discussed about Microsoft and its role in this development. Clearly, Microsoft has been
the leader of the Personal Era by providing the Operating Systems (OS) for traditional
Personal Computers (PCs), but that era has ended. Microsofts power, however,
will still be felt during the Public Era, but in a different way.

During the course of this article, we will examine the history of computing, briefly
discuss and dismiss the current DOJ caper, then move
onto the true challenges which Microsoft presents to the future of computing, framing the
questions which so urgently beg to be answered.

Three Eras of Computing

Since the invention of the computer more than fifty years
ago, there have been a stream of incremental changes. Each year brings a smaller, more
powerful, more practical computer. Each year, more people benefit from the computer. Each
year, more people understand the computer and what it can do for them. In order to analyze
the current situation, though, it is necessary to group this history into significant time
blocks, each reflecting fundamental differences from the previous one. These differences
can be defined by an examination of how information originates, where it is stored, how it
is processed, and who processes it. The "American Heritage Dictionary" defines
"era" as "a period of time characterized by particular circumstances,
events, or personages", so we will use it here to describe those time blocks. There
have been three distinct eras during the period since the computer was invented more than
fifty years ago, and a careful examination of them will provide a basis for dismissing the
DOJ action, and for discussing concerns about Microsoft
in the future. This version of history is greatly abbreviated, and is only meant to
provide a keystone for those two discussions.

The
Central Era

This era was characterized by central control of
data processing. During the early years of this era, the decisions, the authority, the
systems, and the operations were all highly centralized, thus removed from the operating
departments. The computer used at the time, the mainframe, was large and power hungry,
requiring special environmental conditions, and used software that was anything but user
friendly. Because of the specialized nature of the knowledge base, and of the
environmental requirements, this era was marked by empire-building in the Data Processing
department (DP). Later incarnations of centralized computing allowed distributed
processing, but control of who, what, where, and how remained with the mainframe, and with
the DP staff.

Mainframe

In the early part of the Central Era, data were collected from various operating
departments ("locals", for this article), turned over to DP for processing, and
reports were then generated, with all the work and responsibility at the DP end. As a
result, most locals considered DP either a mystery or an annoyance, creating a sensitive
organizational issue. There was a great knowledge gap in this era, with the DP people
knowing computing, and the operating people knowing about the business. The two
didnt have much common ground. In reality, the decisions about what information to
process and what reports to generate came from high levels in the organization, further
feeding a system of confusion and frustration at the working level. The people who needed
to use the processed data didnt always agree with its form or substance, owing
partly to the ignorance at the executive level of the true needs and importance of the
working level, partly to the ignorance of the working level of the corporate goals for the
processed information, and partly to the lack of empowerment of operating employees.
Denying empowerment denies participation, a necessary component of the successful
organization. The net effect of all of this was the realization that human and
organizational factors needed improvement. Technological development needs a catalyst, and
these human resource problems were just what was needed.

During most of this era, IBM controlled the
marketplace. Whatever was done either complemented IBM or competed with them on their
terms, using similar, or identical, technology.

Distributed

During the latter part of this era, IBM struggled with "distributed
processing." In the early 70s, technology became available to communicate with
mainframe systems from remote locations. 278x/378x technology allowed "remote
batch" processing, which was really nothing more than "dumb" peripherals at
remote locations to provide relief of transportation, thereby slightly improving
productivity. This technology jarred the DP world into realizing that more was possible.
Next came 327x which allowed remote data entry through CRTs. A major breakthrough,
however, came with the 379x series, which promised true "distributed"
processing. The 379x, unlike anything which came before it, had intelligence, and could
not only communicate with the mainframe, but process on its own. Now, locals could not
only provide data to a mainframe for processing, they were entitled to process on their
own, if only to a limited extent. Owing to its hard-line stance on mainframes, however,
IBM kept the 379x technology highly proprietary and connected tightly to its mainframe.

The transition to the next era was very difficult for IBM. They had presided over their
industry for 15 years, with outright dominance for most of that time, and their attitude
was "We are IBM. We set the rules, and one of our rules has always been that the
mainframe is the center of the universe. We will not change, but will only promote PCs to
the extent that they will not interfere with our control of this universe." Their
response to the era change was nearly too late. IBM was one of the most admired companies
in the 70s, but now faced a crisis because they didnt anticipate change. In
1981, Microsoft became authorized to distribute MS-DOS to any
hardware vendor. That fact can stand alone in providing the contrast between eras, and as
a lesson in change management.

The Personal Era

Desktop Computing

Invigorated by the indications of the earlier era that the individual wanted part of
the "action", a cottage industry, led by Steve Jobs, was founded in the late
70s to develop a computer for the desktop. Companies like Apple and Commodore entered this marketplace, knowing that
it was time for the paradigm change. An era of the individual was dawning, and the PC was
no more than a manifestation of that change. The individual would rule. The individual
would be assisted in their role as ruler by using a computer empowering them to control
more of their own information and workflow, whether at home or at work or at school. Once
again, human and organizational factors drove a major technological change.

When we discuss technology at our family breakfast, or with business associates in a
planning meeting, or with friends over a glass of wine, we think of a light slate-colored
box with a large display looking like a TV, a typewriter-like keyboard, and a strange
device called a "mouse" next to it. The box is powered by a device called a
processor, and, for most of us, that processor is manufactured by a company called INTEL. The display illuminates when the computer is turned
on, and most of us see one logo or another trademarked by a company called Microsoft. It
is the dominant player in the marketplace for Operating Systems (OS) for INTEL PCs,
indeed once possessing a lawful monopoly. These systems were designed and built for local
computing to run applications, software which is written to run specific tasks for the
user. Companies like INTEL, MS, and manufacturers of peripheral equipment such as storage
devices have made great technological strides during the past ten years to furnish us, the
end user, with better and more powerful ways to perform computing on the local level.
Processing speeds have increased by several fold, disks hold many times more data now than
they did then, multimedia (the ability to play and record audio-video on the computer) has
improved dramatically, and the amount, scope, and quality of application software has
exploded. All of this has been accomplished with a staggering cost-performance
improvement, fueled by Microsoft and INTEL.

Intra-organizational networking

During the late 80s, the concept of sharing data became popular, and companies began to
implement Local Area Networks (LANs) within the organization. As an example, Novell popularized an incarnation of LAN called
"client/server." Its showcase product, NetWare®, was an early leader
in the chase, and provided many users within an organization with the ability to share
information. Years prior, organizations like the International
Standards Organization (ISO), the Institute for Electrical
& Electronic Engineers (IEEE), and the Department of Defense (DoD) developed
various standards for data communication and transfer, removing the high cost of
development of proprietary communication standards and therefore allowing networking
companies like Novell to enter the market, thus making LAN technology widely available,
and spawning a important and innovative industry.

As the technology improved, the scope of this activity was expanded to making
enterprise data available to its users in multiple locations. This model, called Wide Area
Networking (WAN), merely mirrored the LAN over a larger geographic area. Most enterprises
used common carriers to connect their sites, while just the largest few (like the DoD)
which could afford a private network. What had begun as the ability to connect two
computers with coaxial cable and transfer information from one to the other turned into an
enterprise-wide computing model. However, the traditional PC remained the device of
choice, primarily because most of the processing continued to be done locally,
therefore requiring the application software that was written for the traditional PC.

Antitrust on the Personal Era

During the latter part of the Personal era, Microsoft came under the scrutiny of
the Department of Justice for monopolistic practices. There were serious allegations, many
justified, because, under the then-current model for computing, the market for personal
computing was the same market for traditional PCs, which was the market for
Microsoft OSs, clearly defining a market which Microsoft was monopolizing, and thus
subject to antitrust laws.

Déjà Vu

In a situation with eerie similarity to IBMs denial of the importance of the PC,
Microsoft virtually ignored the Internet toward the end of the Personal Era. Its attitude
seemed to be "We are Microsoft. The desktop needs us and our customers arent
moving anywhere without us. We refuse to address the Internet unless it impacts our OS
business." It watched for a while, then saw the "light", and rushed a
product, the Internet Explorer, to the market.

The Public Era

To define the Internet in detail is well beyond the scope of this
article, so we will proceed assuming that each reader will use their own definition, and
hope that it is reasonably close to reality. Whatever the definition, the Internet has
entirely changed the computing paradigm, primarily because the availability of information
has expanded beyond the control of the enterprise, prompting the need for a different,
wider-ranging set of standards. The Internet has broadened the scope of the network,
allowing any device to connect so long as it has the capability to conform to certain open
standards. There is no longer a need or guarantee that the end user appliance will be a
traditional PC, which Microsoft controls. This has happened because there is no central
computing authority to dictate how access is obtained, or what to process, or who the
processor is or how to process. There are now standards which are set by organizations
which recognize the universal nature of the network, and that universal access to that
network is the key to success. The user OS has been de-emphasized, as increasing amounts
of data, and logic to process the data, is now accessible through the public network,
whether on public or private sites. One example of this technology is the browser. The
connection and transport (TCP/IP) and processing of the data is done above the OS level,
and is performed to the TCP/IP and Java standards, rather than to the
proprietary standard of a given OS such as Windows. It has diminished the importance of
the OS, thus allowing for the de-emphasis of the traditional PC, and promoting the rise of
devices which more reflect the job that they are required to do.

This transformation is what has shaken the world of computing, and
has changed the market place forever. It affects both the argument for dismissing the DOJ
suit, and for addressing the real threat from Microsoft. We will euthanize the DOJ case
against Microsoft first. It is in the way of useful argument.

The Dead DOJ (Netscape) Case

The DOJ, assisted by its whining but powerful partners, James Barksdale (C.E.O. of Netscape Communications) and Scott McNealy (C.E.O. of Sun Microsystems), are precluding any meaningful discussion
of the current state of the technology world and Microsoft by its absurd prosecution. It
is a comedy, and appears as if two 12-year-olds, Jimmy and Scotty, jealous of their more
successful nemesis, Billy, went to their smarter but nerdish buddy, Joel, and said,
"Get Billy", and then ran away to leave Joel their cruel works. Joel
couldnt figure out any legal way to get Billy, so he made something up. The problem
with this scenario is that Billy really does have the potential to do something wrong, but
his enemies have selfishly and unwittingly assisted him in creating a diversion, and are
helping him to avoid talking about the real problem. Billy is laughing all the way to the
bank.

The years 1995-1997 marked the end of the Personal Era and the beginning of the
Public Network Era. It is for that reason that Microsofts dominance of the desktop
OS for PCs is irrelevant to our society from this point forward. The desktop (user
interface, to be precise) now has the primary responsibility of accessing to the public
network for one reason or another (research, commerce, information, news, company
business), and so, as such, the importance of its OS is greatly diminished because the
information to be processed and the logic to process that information is outside the
desktop, made accessible and usable only by common standards such as those with
strange-sounding names like TCP/IP, HTML, and Java. Each of these
standards is important because none of them require the Windows OS to operate.

It is futile and wasteful to have lawyers trying to fit a law passed in 1890 to
a situation which only became ripe in the middle 1990s. The DOJ investigation and lawsuit,
instigated and sustained on behalf of its client Netscape, is without any merit
whatsoever, and should be dismissed.

Since the DOJ remains stuck in the wrong era, and thus is using the wrong market model,
it necessarily doesn't have a case. We will bury the DOJ case before
undertaking the real business at hand, which is to define why we should be watching
Microsoft.

The market, as defined by DOJ, is incorrect

With the advent of the Public area, the
paradigm of computing has changed dramatically during the past thirty-six months, and the
traditional PC, as described herein, will no longer enjoy a predominant (at least in
monopolistic terms) position on the user end of the computing marketplace. With emphasis
on Internet access, the appliance market will become crowded with other devices along side
the traditional PC, only some of which have any MS software at all. The computing
marketplace has been freed from the constraints imposed by Microsofts market
dominance at the user end. The following is a partial list of competitive devices and
technologies, all poised to join the user end of the computing model of the early 21st
century:

Java, and Java-compliant devices

Workstations (e.g., Sun), using variants of UNIX (e.g., Solaris)

Browsers and other "middleware", running on MS, as well as non-MS, systems

Apple Macintosh, (enormous market share increases by the end of 1999)

Handheld computing devices, using Windows CE or a non-MS OS

Network computers, using Java, or other "write once, run anywhere"
technologies

Television, using common carrier or cable access

The monopoly
is not durable

Once the computing model, thus the market, are redefined correctly, Microsofts
"monopoly" is clearly ephemeral, and therefore not subject to any current
antitrust statute.

Internet access is a legitimate part of the OS

Internet/public network access is an integral part of any reasonable definition of
computing for 1998 and beyond, and, therefore, should be part of any OS for any appliance.
MS has the right and responsibility to include that capability in its operating system.
Any actions to the contrary merely prove the premise that the DOJ is representing Netscape
and a few other companies. Apparently, the Circuit Court of Appeals agrees with that
statement, as reflected in its opinion of
June 23, 1998 which lifted the injunction preventing Microsoft from including IE in its
OS, and returning a decision to the lower court to revoke or reexamine the need for a
Special Master.

Antitrust laws protect competition
not competitors

This heading should actually have come first, not last. The DOJs case is clearly
meant to protect a single competitor, Netscape. Now that the Court of Appeals has quashed
the DOJ argument about IE, this case is over. The public filings needed to be withdrawn to
bring closure to the situation, and make room for the new debate.